Weak Nifty holds 8000, oil metals shine; Fed meet eyed

After a massive intraday volatility, equity benchmarks closed the session lower for the fifth consecutive session on Wednesday. The Sensex fell more than 300 points and Nifty tanked below the 8000 level (for the first time since January 28) in early trade, even the broader indices shed more than 2 percent. But indices immediately recovered more than half of the losses with the Nifty clawing back above the psychological level, and then remained in a consolidation mode for rest of the session.

The 30-share BSE Sensex lost 71.31 points to close at 26710.13 and the 50-share NSE Nifty declined 37.80 points to 8029.80 while the BSE Midcap and Smallcap indices fell 0.6 percent and 1 percent, respectively.

Experts expect the market to correct more if the global peers and currencies do not get stabilised. They do not see immediate sharp pullback in the market in near term, but they advise buying quality stocks once the market gets stabilised.

Amit Gupta of ICICI Direct feels certain indicators in the market still suggest that short-term weakness is here to stay for some more time. He expects more of such weakness towards the end of the expiry, however does not see an immediate sharp pullback. He feels the Nifty at 7900-7950 is a strong support for the market.

Sunil Garg, JPMorgan says a widespread sell-off across both developed and emerging markets will eventually present buying opportunities, but not today.

“Our analysis suggests more downside risks across Asian markets. In absolute terms, we see broad-based downside risks, particularly in India and the ASEAN,” he adds.

The rupee hit fresh 13-month low of 63.85 in morning trade, but that also recovered following recovery in equity markets. It declined 6 paise to 63.59 a dollar.

Globally, the ruble recovered after hitting a low of 80 a dollar, as Russia’s finance ministry started selling foreign-currency. But there was no respite for crude, as OPEC and Russia kept output steady. Brent crude oil prices slipped 1 percent to USD 59.38 a barrel and US crude went down 1.8 percent to USD 54.93 a barrel (at 16 hours IST).

Crude fall weighed on European markets too; France’s CAC, Germany’s DAX and Britain’s FTSE were down 0.2-0.5 percent (at 16 hours IST) while Asian markets closed mixed. Japan’s Nikkei gained 0.4 percent and China’s Shanghai was up 1.3 percent whereas Hang Seng in the Hong Kong and the South Korean Kospi went home with marginal losses.

Caution also prevailed ahead of the outcome of the two-day FOMC meet, which will be announced later tonight.

Mahindra and Mahindra fell over a percent as the company said it may observe on need basis no production for 1 to 7 days in a month upto March 2015 at some of its automotive as well as tractor plants.

Shares of ITC, Sun Pharma, Hero Motocorp, Cipla and Bharti Airtel were the biggest losers on the Sensex, down 2-3 percent followed by Tata Motors, L&T and Bajaj Auto with 1 percent loss.

However, Tata Steel gained 1 percent as the company received interim relief from the Odisha High Court. Odisha government allowed the steel maker to resume iron ore mining operations in four mines till January 28.

Odisha accounts for around 70 percent of Tata Steel’s captive iron ore supplies. Deutsche Bank reiterates a buy with a target price of Rs 675 per share as the brokerage believes these favorable orders will assuage investor concerns.

In the broader space, SpiceJet lost another 5 percent. The airline was grounded earlier in the day after oil companies stopped fuel supply. But the airline managed to start flight services in Delhi in late afternoon.

Declining shares outnumbered advancing ones by a ratio of 1778 to 1040 on the Bombay Stock Exchange.